Crude oil has posted gains of 1.7% on Thursday, erasing the losses seen on Wednesday. In the North American session, West Texas Intermediate crude oil futures are trading at $56.91, up $0.56 or 1.00%. Brent crude oil futures are trading at $62.23, up $0.48 or 0.76%.
EIA Crude Inventories Shows Large Surplus
The markets have become accustomed to inventory surpluses, and this trend continued with this week’s crude report from the Energy Information Administration (EIA). The surplus of 7.9 million barrels crushed the forecast of 1.9 million. The EIA has reported surpluses in six of the past seven weeks, with some 30 million added to U.S. inventories during that period.
Chinese Tariff Announcement Boosts Crude
There is optimism in the markets that the U.S. and China are close to reaching an interim trade deal, known as “Phase 1”. This would allow the two countries to sign a limited trade deal, while leaving the most intractable issues for another round of negotiations. On Thursday, the Chinese commerce ministry announced that the two countries would phase out tariffs, but it did not provide a timetable for such a move. The announcement has raised hopes that the U.S. will cancel a tariff which is scheduled to take effect on Dec. 15 on some $156 billion worth of Chinese products. If a deal is signed, global growth would receive a big boost, which would likely send crude prices to higher ground.
Crude Technical Analysis
Traders should keep an eye on the 50-EMA, which continues to provide support, indicative of an upward trend. Currently, this line is at $55.15. Below there is support at $53.00. On the upside, there is resistance at the $58.00 level.
This article was originally posted on FX Empire
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